A dramatic week in Europe that illustrated to me how potentially unstable the European Union is despite the bright economic outlook.

ItalyThe political deadlock that followed Italy’s election in March has finally ended. Five Star Movement and Lega have agreed to a coalition that has already captured Europe’s attention.

While neither leader will become Prime Minister, that honour goes to Giuseppe Conte a previously little-known member of the Bureau of Administrative Justice, the self-governing body of administrative magistrates.

The new government will have to overcome a number of challenges and it isn’t clear that the two parties will be able to work together.

Historically, recent Italian coalitions have had such a short lifespan that both sides probably realise they will have to go to the Italian electorate again in the not so distant future.

For that reason, I almost see this as a public perception battle as well as a functioning government. Both leaders will have public perception at the back of their minds as they make major decisions.

I will be closely watching who appears to be gaining the advantage between Luigi Di Maoi and Matteo Salvini as the winner of that battle may be the next “true” Italian Prime Minister…

SpainMariano Rajoy was forced to step down on Friday after a motion of no confidence was passed by the Spanish Chamber of Deputies.

Despite heading the largest party (the People’s Party have 134 out of 350 seats), Rajoy was undone by a large coalition of the left and regional parties.

Rajoy’s time had undoubtedly come. He had overseen the brutal crackdown in Catalonia and his party was also embroiled in the “Gurtel affair”. Last week, a People’s Party secretary was jailed for 33 years for fraud and money laundering.

However, the fragmented state of Spanish politics means that the Spanish Socialist Workers' Party under the new Spanish Prime Minister Pedro Sanchez will struggle to rule (they currently only have 84 seats).

The current government only has two years left to run before elections are necessary but I am very skeptical it will last that long.

The Citizen’s Party is currently leading in the polls (see below) and I can see them doing everything possible to agitate for an early election. They gained a lot of exposure when they won the most seats in the most recent Catalan elections in December.

I believe they may do the same in any Spanish elections and end the short reign of this new socialist-led Spanish government.